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Jan 12, 2018
01/18
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inflation risk rises because you have the fed trying to push back. the whole tax story is making them more likely to hike this year. prettyn: you all seem constructive on the 10-year premium in the u.s. looking at the situation with bunds versus treasuries, a lot of you have talked about the attractiveness of 10-year treasuries versus bunds, but that disappears when it is currency hedged. matthew: that's accurate and you look at european high-yield trades, inside of 3%, 2.8%. that twoyou convert u.s. dollars, that adds about 200 basis points. you have to factor in that currency translation. important but does not really take away from the story. there is a big gap between bunds and treasuries. that trade is exploitable, one that you want to take advantage of. we are. that,w: i would add to not every investor currency hedges. central banks do not currency hedge. there are pension funds in the world that do not currency hedge. there are life insurance companies that do not currency hedge. there are different types of investors in the world, they look a
inflation risk rises because you have the fed trying to push back. the whole tax story is making them more likely to hike this year. prettyn: you all seem constructive on the 10-year premium in the u.s. looking at the situation with bunds versus treasuries, a lot of you have talked about the attractiveness of 10-year treasuries versus bunds, but that disappears when it is currency hedged. matthew: that's accurate and you look at european high-yield trades, inside of 3%, 2.8%. that twoyou...
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Jan 13, 2018
01/18
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priya: i think we heard from the fed. i think the fed needs to be taken in context. they are telling us they will hike. we heard from new york fed president dudley yesterday. not that concerned about inflation. that is why breakevens have risen while inflation term premium has not. you have inflation picking up, the fed saying we are going to hike three times, we will hike in 2019, so the idea that they may be behind the curve is not there. so therefore term premium remains low. yet inflation risk rises because you have the fed trying to push back. the whole tax story is making them i think marginally more likely to hike this year. jonathan: you all seem pretty constructive on the 10-year treasuries in the united states. mike, looking at the situation with bunds versus treasuries, a lot of you have talked about the attractiveness of 10-year treasuries versus bunds, but that advantage disappears when it is currency hedged. matthew: i think that is accurate, and you look at european high-yield trades, inside of 3%, 2.8%. that is eye-popping. you converted into you -- i
priya: i think we heard from the fed. i think the fed needs to be taken in context. they are telling us they will hike. we heard from new york fed president dudley yesterday. not that concerned about inflation. that is why breakevens have risen while inflation term premium has not. you have inflation picking up, the fed saying we are going to hike three times, we will hike in 2019, so the idea that they may be behind the curve is not there. so therefore term premium remains low. yet inflation...
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Jan 20, 2018
01/18
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robert: i think the fed will keep a lid on the front end of the curve. there is less impact on the front end of the issuance than on the back end. the back end is benefiting from discussions on deregulation. that would make it easier for dealers to carry inventory of long treasuries, you are seeing pressure on swap deals rather than treasuries as treasuries become easier for dealers to hold. jonathan: i want to get your thoughts on what has been happening with inflation linked securities. you now see the breakeven spread between the 10 and 30 year go to negative. what happens -- what does that mean when the spread starts doing that? what happens if that break goes negative? robert: the drivers are whether it is short-term or long-term. on a long-term basis, there are global dollar precious on prices that are likely to keep inflation under control for the foreseeable future. in the near term, commodity prices have been strong, they've been the biggest driver of breakeven risks. that is why you see commodities prices going up, more of an adjustment in shor
robert: i think the fed will keep a lid on the front end of the curve. there is less impact on the front end of the issuance than on the back end. the back end is benefiting from discussions on deregulation. that would make it easier for dealers to carry inventory of long treasuries, you are seeing pressure on swap deals rather than treasuries as treasuries become easier for dealers to hold. jonathan: i want to get your thoughts on what has been happening with inflation linked securities. you...
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Jan 21, 2018
01/18
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therefore you have a fed that is likely to keep moving. jonathan: let me come to you, the very front end of the curve, why do you see the value there? they have been short the two you're over the last year or so and is where money has been made. i think in the short-term, there is a lot of uncertainties out there. i think we are not being paid for the duration risks that you see going further down the curve. it is not only in terms of treasury, but if you look at other assets, including ige securitized assets, even inflation links. at the moment, the carrier you are getting as much better. jonathan: does the argument resonate with you because there is a massive position that could make it portable to reprice the other way? robert: i think the spread product is attractive. i definitely agree with that. of the value in the back end the curve is difficult to judge. i have to look in a global context. percentile oflus relative value, relative to europe on the back end of our curve. the capital markets are really global. a lot of the investment
therefore you have a fed that is likely to keep moving. jonathan: let me come to you, the very front end of the curve, why do you see the value there? they have been short the two you're over the last year or so and is where money has been made. i think in the short-term, there is a lot of uncertainties out there. i think we are not being paid for the duration risks that you see going further down the curve. it is not only in terms of treasury, but if you look at other assets, including ige...
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Jan 26, 2018
01/18
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we are talking about the fed now. lisa: we are talking about the week ahead and what we are most focused on right now. rachel, i want to start with you. is the job support the most important thing? is at the trump speech? report, we jobs don't think it will be that material this coming week. we expect a fairly consensus-high number that will continue to move the unemployment rate down. we think the market is expecting a good jobs number. the gdp number was a bit of a disappointment. missll it a high quality in that consumer spending and corporate spending were good. it was inventories and trade that negatively impacted it. the good numbers are good supports for the economy going forward. subadra: i think we could get a lot of interesting soundbites next week given the state of the union. we can get -- for me as a rate strategist, the treasury announcement will be interesting. we can get some initial hints on how the treasury will be changing its financing over the upcoming months. the fomc meeting will be quite intere
we are talking about the fed now. lisa: we are talking about the week ahead and what we are most focused on right now. rachel, i want to start with you. is the job support the most important thing? is at the trump speech? report, we jobs don't think it will be that material this coming week. we expect a fairly consensus-high number that will continue to move the unemployment rate down. we think the market is expecting a good jobs number. the gdp number was a bit of a disappointment. missll it a...
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Jan 27, 2018
01/18
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ahead of janet yellen's last fed her legacy discussed and the incoming fed chair jay powell. we start with the big issue, dalio's warning resonating from davos to new york. take a listen. ray: a 1% rise in bond yields will produce the largest bear market we have seen since the 1980-1981 period. >> has that bear market started? are we in it? >> i think we are in it. >> there will be a time the bank of japan and ecb begin tightening. that will be the time when bond yields increase. i don't see that now, unless i'm wrong on inflation. i don't believe the federal reserve will get the 10 year to 3.60% >> i don't think the bear market is starting. since 1990 we had many, many predictions of a bear market in bonds, but it has not happened. lisa: joining me in new york is subadra rajappa, and rachel golder, and coming to us from london is luke hickmore. i want to start with you, subadra. has the selloff in benchmark the s just begun, for is this the extent of it and will people pile back in? subadra: that's a good question. i think there is still more room for bonds the selloff from
ahead of janet yellen's last fed her legacy discussed and the incoming fed chair jay powell. we start with the big issue, dalio's warning resonating from davos to new york. take a listen. ray: a 1% rise in bond yields will produce the largest bear market we have seen since the 1980-1981 period. >> has that bear market started? are we in it? >> i think we are in it. >> there will be a time the bank of japan and ecb begin tightening. that will be the time when bond yields...
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Jan 5, 2018
01/18
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that's the break on the fed. we do think these will see some periodic pressure on things, but a massive gap wider in risk assets. jonathan: i want to wrap things up. if you believe this could be the longest cycle ever, but you think spreads are too tight, then after this, where do you take credit risks that will generate considerable capital returns? it can't be risk completely. krishna: if you're looking for al returns, by equity for god's sake. you're looking for some level of income and not meaningful capital appreciation. we think within the credit markets the most attractive asset class is emerging-market local debt. that is driven by their high their high rate levels plus the fact that the dollar remains stable or continues to weaken. that is really the best case i can make for that asset class. ,ther than that, credit overall if you took the full plan, you can consider yourself lucky. jonathan: kathy, you have the final word here. kathy: i think most risk assets are highly valued and emerging-market bonds
that's the break on the fed. we do think these will see some periodic pressure on things, but a massive gap wider in risk assets. jonathan: i want to wrap things up. if you believe this could be the longest cycle ever, but you think spreads are too tight, then after this, where do you take credit risks that will generate considerable capital returns? it can't be risk completely. krishna: if you're looking for al returns, by equity for god's sake. you're looking for some level of income and not...
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bill and i think everybody knows that for the past one hundred years or so there we have been sharing fed profiteer it's right yes i worked on a bunch of those bills yes they're very controversial but let me ask you the i don't know if you may have heard the end of alex's report from toronto on nafta but what's your take fred on how the farm and rural economy has fared on under nafta do you have a view yeah i think that alex if anything is underestimating the impact this is absolutely huge for american farmers that particularly in terms of meat exports sugar deals with japan deals with canada mexico and the idea was we were supposed to get out of nafta and make bilateral agreements there are no bilateral agreements apart none of this is happening this is completely stalled it's a looming disaster. you know i didn't hear the president say anything about other issues issues i actually worked on in the past fred we're all housing business rolex tricity he did touch on on broadband and he did say a little bit about that matter of fact i'll try to find find it here but he signed a couple of ex
bill and i think everybody knows that for the past one hundred years or so there we have been sharing fed profiteer it's right yes i worked on a bunch of those bills yes they're very controversial but let me ask you the i don't know if you may have heard the end of alex's report from toronto on nafta but what's your take fred on how the farm and rural economy has fared on under nafta do you have a view yeah i think that alex if anything is underestimating the impact this is absolutely huge for...
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in order to be has zero which i don't want you to agree with sign your fed your b.s. overdoing could have their list so twisted and i was so alone with their fed your grandmother sitting could offer her now that i sell for america. in consultation i do on you why i need. to model a lot of nice gloss and non they were all smokes or wear and tear out by any non there. and then just tend to show like on his own when you have to block and the low shifts of advice i'll tell you that and i would have a profit without the first so eat your mindless stuff but the war and damage he said as she. bore me a month left with it i will face it off by oh. oh . we're going to miss it at. the. moment don't lie. down oh i did it a couple times are kind enough. to . do it a little off it. so i thought i was just i said a mail from simplified the idea and i had to start with to ask him to fix. my book well they're much on. the go so the shrunken is what i've had now how them for that and now the idea. we're going to find out and that's our financing and this is it either they'll say i mus
in order to be has zero which i don't want you to agree with sign your fed your b.s. overdoing could have their list so twisted and i was so alone with their fed your grandmother sitting could offer her now that i sell for america. in consultation i do on you why i need. to model a lot of nice gloss and non they were all smokes or wear and tear out by any non there. and then just tend to show like on his own when you have to block and the low shifts of advice i'll tell you that and i would have...
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in economics the first non academic to run the fed for thirty years i think people who say that powell is a yellen clone are in for a surprise because i don't buy that about him you know he's an attorney right. he's an attorney yes but his because davis' background has been in private equity yeah right ok and before we let you go one other area i want to talk about it it's about the world around us so let's talk about the other central banks around the world the big ones bank of england european central bank bank of japan what are they doing now on rates and quantitative easing and actually could you explain quantitative easing or q.e. as we call it for those that might not know and then give us a little mini tour of the key central banks around the world. to quantitative easing is basically buying securities in the open markets trying to push interest rates down further than they would otherwise be in a zero interest rate world because zero is theoretically a bound. and banks banks engage in central banks in gauging q.e. again hoping to spur borrowing and lending and consumption in th
in economics the first non academic to run the fed for thirty years i think people who say that powell is a yellen clone are in for a surprise because i don't buy that about him you know he's an attorney right. he's an attorney yes but his because davis' background has been in private equity yeah right ok and before we let you go one other area i want to talk about it it's about the world around us so let's talk about the other central banks around the world the big ones bank of england...